Jobless claims trended lower in the latest weekly data, underscoring still-elevated demand for workers even as Omicron-related disruptions continued to exert pressure on the labor market.
The Labor Department released its latest weekly jobless claims report Thursday at 8:30 a.m. ET. Here were the main metrics from the print, compared to consensus estimates compiled by Bloomberg:
Initial jobless claims, week ended Jan. 29: 238,000 vs. 245,000 expected and a revised 261,000 during prior week
Continuing claims, week ended Jan. 22: 1.628 million vs. 1.620 million expected and a revised 1.672 million during prior week
First-time unemployment claims fell for a back-to-back week after rising to the highest level since October in mid-January, coming in at nearly 300,000. The spike in claims tracked a surge in coronavirus cases across the U.S. between December and January, which rendered many businesses temporarily closed and many individuals sick or concerned over becoming ill at work.
"The second straight hefty drop in jobless claims continues the reversal of the Omicron hit," Ian Shepherdson, chief economist for Pantheon Macroeconomics, wrote in an email Thursday morning. "We expect claims to keep falling — though they’ll likely be unchanged next week, thanks to a seasonal quirk — with new cycle lows likely in mid-March, about six weeks later than we would have expected in the absence of Omicron."
The four-week moving average for new jobless claims, which helps smooth out volatility in the weekly data, still rose by 15,000 to 247,000 for the week ended Jan. 29, due to the increases in claims in prior weeks.
Still, the recent tallies of weekly jobless claims remain well off the highest points of the pandemic. And this time last year, jobless claims were coming in at a weekly rate of well over 800,000.
"Omicron case counts remain elevated but have moved lower from the recent peak in mid-January," Rubeela Farooqi, chief U.S. economist at High Frequency Economics, wrote in a note Wednesday. "Businesses were forced to scale back or close temporarily because of infections or isolation protocols. However, as the health backdrop improves, we expect layoffs to continue to trend lower."
The general trend toward improving levels of jobless claims belies the strain many Americans are still experiencing on the sidelines of the workforce, however. According to The Century Foundation, about 3.8 million unemployed individuals have been unable to claim unemployment benefits because they have already exhausted their state or federal pandemic-era jobless insurance.
The jobless claims data also does not meaningfully capture the labor supply shortages that have emerged as the bigger weight to the labor market during this stage of the pandemic recovery. As of December, U.S. job openings had risen to nearly 11 million, nearing the all-time high reached back in July 2021 and marking a seventh straight month that vacancies held above the 10 million mark. This has caused increasing competition for employers trying to bring on and retain enough labor to meet demand.
The weekly jobless claims report also serves as one of the last additional pieces of employment data heading into the Labor Department's official monthly jobs report on Friday. Consensus economists expect to see that non-farm payrolls grew by 150,000 in January — or the least since December 2020 — due to impacts from the Omicron variant. The unemployment rate is expected to hold steady at 3.9%, matching December's rate for the lowest since the start of the pandemic in the U.S.
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Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck
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